The company plans to lay off up to 8,000 of its 52,000 employees worldwide, according to sources familiar with the matter.
The coronavirus crisis has severely affected Rolls-Royce’s operations, as aircraft manufacturers have reduced production rates and air traffic has dropped, severely affecting its reactor maintenance units.
About 4,000 British workers have been put on leave, the company said Thursday before its annual virtual meeting, which means the government is paying 80 percent of the wages of about a quarter of the company’s workforce. Some of its employees have participated in the national effort to build more fans for the NHS.
However, with lower aerospace volumes expected for some time, Rolls-Royce will have to shrink permanently, said its general manager, Warren East.
The company had to “make the difficult but necessary decisions to get the group out of this period with an appropriate cost base for what will be a smaller commercial aerospace market which may take several years to recover”, said he declared.
The company plans to deliver only 250 engines this year, just over half of its previous forecast of 450. Its engines are used on Airbus A330, A340, A350 and A380 aircraft, as well as on Boeing 777 and 787 aircraft Dreamliner.
Many airlines that operate such planes have already reported extreme job cuts. British Airways is laying off 12,000 workers and Ryanair and Virgin Atlantic are cutting 3,000 jobs each.
Rolls-Royce said the flight hours recorded by its engines worldwide were about 40% lower than previous expectations in the first four months of the year. Hours fell 90% in April, resulting in a “noticeable reduction in the volume of service visits”.
East also said the company is making “stronger than expected progress” in cutting costs, saving it £ 1 billion this year.
The firm has also made progress in returning the troubled Trent 1000 engine to perfect working order. The engine has been in trouble for more than two years, and none of the program workers have been on leave while trying to resolve durability issues with its compressor parts.
Rolls-Royce said it has resolved eight of the nine engine problems. Technical fixes and aircraft grounding have already cost billions of pounds.
The company said its extensive defense activity had cushioned the blow from the commercial aviation crisis, although the rules of physical distancing had caused disruption. Demand from its energy customers, however, declined due to the oil and gas crisis caused by the drop in oil prices.